Income investors have had a rough ride over the past 18 months, but for those that require income there are still some investment companies that offer good yields, according to data from Stifel, an investment banking group.
In total there were 23 trusts yielding more than 4%, although this was two lower than the previous year as increased share prices caused lower dividend yields in the other names, the report said.
A dividend yield is the percentage of how much a company pays out in dividends relative to its share price, a key consideration for income-seeking investors.
Of the trusts remaining on the list Henderson Far East Income had the highest yield at 7.9%, one of two trusts yielding above 6%. The trust is running on a 1% premium
It buys what the managers view as the most compelling combination of value, growth and income stocks across Asia. Typically these are among the financials, materials and energy sectors.
The trust has underperformed nearer term, dropping down to fourth quartile over five years (losing 24.8%) but long term it has outperformed the average IT Asia Pacific Equity Income trust, making 61.5% since 1995 (the furthest FE Trustnet data goes back). The trust itself was launched in 1930.
The other trust was BlackRock Latin American, which had a yield of 6.3%. It was one of two trusts on the list from the IT Latin America sector. It is currently on a 10.3% discount.
There were several UK equity income trusts on the list, including Aberdeen Standard Equity Income, the third-highest yielder on the list at 6%.
Manager Thomas Moore has run the portfolio since 2011 though the trust itself was established in 1991.
It is predominantly invested in financials with almost 40% of the fund in the sector, but also has reasonable allocations in basic materials, consumer products and industrials. Under Moore’s tenure it has underperformed both the FTSE All Share and IT UK Equity Income sector, returning 107% versus 144.1% and 113.5% respectively.
Merchants Trust was one of the most well-known names on the list. The trust’s manager, Simon Gergel, was extremely bullish on the UK value story at the start of 2021, telling Trustnet that the trust could rally one the back of a successful vaccine rollout.
It has been the second-best trust in the IT UK Equity Income sector over five years, returning 72.3%. It has a yield of 5%.
JPMorgan Claverhouse was another name well-known name on the list, with a yield of 4.1%. The trust is run by William Meadon who applies a barbell approach between growth and value stocks, citing the merits to both styles in this process.
Meadon runs the £452.9m trust with Callum Abbot, who joined in 2018. The trust has been the fourth-best fund in its sector over five years, making 63.6% versus 42.8% by the average sector peer.
Other high-yielding UK trusts were Janus Henderson High Income, Murray International and BMO UK High Income.
The premium and discount data in the study is accurate to the 9th of November.